Sam Palmisano, Chairman and CEO of IBM, coined the term “Globally Integrated Enterprise” in an article he wrote for Foreign Affairs in 2006.

In this article, Palmisano argues that in the international model of the 19th century, most operations were centred in their home country, with only elements of sales and distribution happening overseas. The multinational model of the 20th century—in which companies created small versions of themselves in each country—was a response to the trade barriers that arose after the World Wars.

Today the Globally Integrated Enterprise can locate functions anywhere in the world, based on the right cost, skills and environment, argues Palmisano. This new organisational form has emerged because everything is connected, and work can move to the place where it is done best.

The following short video summarizes Palmisano’s perspective on the opportunities and threats associated with leading a Globally Integrated Enterprise (3:10):

The barriers that used to block the flow of work, capital and ideas are weakening. In a flat world, there is no home and away and work will intelligently seek out the place on the globe where the intersection of expertise and cost are optimized.

Some Questions to Ponder:

How do Multinationals differ from Globally Integrated Enterprises?

What are the key opportunities and challenges associated with leading a Globally Integrated Enterprise today?